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"We rate MORNINGSTAR INC (MORN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MORN's revenue growth has slightly outpaced the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 11.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MORN's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for MORNINGSTAR INC is rather high; currently it is at 58.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.62% is above that of the industry average.
- MORNINGSTAR INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MORNINGSTAR INC increased its bottom line by earning $2.65 versus $2.10 in the prior year. For the next year, the market is expecting a contraction of 3.0% in earnings ($2.57 versus $2.65).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income has decreased by 4.1% when compared to the same quarter one year ago, dropping from $31.46 million to $30.18 million.
- You can view the full analysis from the report here: MORN Ratings Report